Finance Basics
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Avg score: 37% • Most missed: “Categorized as current assets because are used & then replaced”
Finance Basics
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25 Questions

1. Debt securities that give the bondholder an option to exchange their bonds for shares of common stock

2. Total common equity / Common shares outstanding

3. Categorized as current assets because are used & then replaced

4. Principal task is to evaluate proposed decisions and judge how they will affect the stock price and thus shareholder wealth. Success or lack thereof of projects can determine the stock prices

5. Accomplished through a combination of current liabilities - long-term debt - and common equity

6. Financial Management - Capital Markets - & Investments

7. Expected % Gain of Stock Price = Increase of stock $ less original stock $ ($1 - 000 - $10) divided by original stock price (/ $10 x 100%) (100% is a constant)

8. Focuses on decisions relating to how much and what types of assets to acquire - how to raise the capital needed to purchase assets - and how to run the firm so as to maximize its value

9. An unincorporated business owned by 2 or more persons. 3 advantages - Easy and inexpensive to form - subject to few government regulations - and subject to lower income taxes than corporations. 3 disadvantages - Unlimited personal liability for the

10. Acquisition of a company over the opposition of its management

11. The markets where interest rates - along with stock and bond prices are determined

12. An investor whose views determine the actual stock price

13. Finding the proper values of individual securities

14. Current assets - Current liabilities

15. Success (0.5 x $2000) + Failure (0.50 x $0) = $1 - 000 (New Stock Price)

16. Situation in which the actual market price equals the intrinsic value so investors are indifferent between buying or selling a stock

17. What investors DO expect given the limited information they actually have

18. 1 for the IRS - the other for reporting to investors

19. A special designation that allows small businesses that meet qualifications to be taxed as if they were a proprietorship or a partnership rather than a corporation - exempt from corporate tax - must have less than 100 stockholders to qualify

20. Dividends paid to common shareholders / Common shares outstanding

21. Investor psychology is examined in an effort to determine if stock prices have been bid up to unreasonable heights in a speculative bubble or driven down to unreasonable lows in a fit of irrational pessimism

22. Cumulative total of all earnings kept by the company during its life - a claim against assets - they do not represent cash on the balance sheet

23. A non-cash charge similar to depreciation except that it is used to write off the costs of intangible assets over their useful life

24. Focuses on decisions concerning stocks and bonds and includes a number of activities - 1) Security Analysis - 2) Portfolio Theory - & 3) Market Analysis

25. Sole Proprietorships - Partnerships - Corporations (incl. S Corp. and Non-profits - Limited Liability Companies (LLC) and Limited Liability Partnerships

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